Good evening, first the good news, home sales finally coming back, 6 1/2 year high in fact. Now the bad news. What happens when the people next door are the neighbors from hell? They can bring the value of your home down by thousands. And face it, we probably all have horror stories living next to them. Until you have woken up to a bulldozer bearing down on you, everything else pales. Jay shadeler has a video. A demolition derby. it's like a movie scene. A truck got flattened like a pancake. He didn't care. Reporter: In the annals of neighborhood mayhem. Call 911, guys. Reporter: It doesn't get much crazier than this. Unbelievable. There's someone on a tractor on pioneer and, oh, my gosh! Okay, I can't understand you when you're screaming. He's smashing my house. Smashing your house? And it's your neighbor? I'm getting the out of here. Reporter: Neighbors terrorized, by a bully in a bulldozer. I was afraid I was gonna die. I'm glad we're both alive. Reporter: Dan and mary davis, and barb porter are retirees who came to port angeles, washington looking for a bit of paradise. Why did you want to move here? Well, it's a beautiful place to live. And we like to fish and the water is right here. Reporter: Clinging to the northern shore of the olympic peninsula, this town of 20,000 is a pit stop for giant oil tankers and a port-of-call for lumbermen and fishermen. More recently the place has served as a scruffy setting for the megahit movie "twilight." But even if you blended a drop of vampire blood with a dose of that old cult classic "killdozer," where a bulldozer is possessed by an alien demon, you'd have a long way to go to "out-weird" this story. Reporter: But before we meet the neighbor from the dark side lets trace his path of destruction. Beginning with a vacant modular home dan was building as a rental unit. This is where my house sat. Reporter: And this is where it wound up. Next door. He shoved my house through the fence, collapsed both their storage buildings. It was way over there, and it ended up here. And that's my house there. He headed toward this small house here, and it looks to me like he destroyed that house. Reporter: To say nothings of dan's pickup truck, which, in the end -- could have been carried away with a spatula. All of this, courtesy of a bulldozer driven by a very angry logger, their neighbor barry swegle. I talked with his brother jeff. Barry's actually an easygoing guy. I'm almost smiling, just because of the juxtaposition of, I'm picturing him up on the dozer, knocking down houses as an easygoing guy. I'm trying to get my head wrapped around that. Well, I guess things change. You know, if somebody makes you mad enough, you snap. You do things you probably regret. Reporter: Yeah. I think that's what happened here. He, he snapped. Reporter: Long before barry snapped, crackled and popped his way through this neighborhood. Reporter: A fella down in colorado climbed in an armor-clad bulldozer in 2004 and laid waste to a good chunk of the town of granby. When the dozer's engine finally died, the man killed himself. Miraculously, up here in port angeles, no one was injured in barry's wrecking spree, but what set him off? What do you think was his big gripe? Well, it really boils down to one of the neighbors, and that's dan davis. Barry kept telling me that dan was pissing him off. Doing little things to get him mad. They say good fences make good neighbors. Well, not in this case. Seems mr. Davis had been trying to build a fence between his property and barry swegle's driveway. How far back does that go? Oh, it goes back for years, over that fence up there. I think he wanted something that didn't belong to him and he was mad because we were fixing it. Property lines are the most heated dispute between neighbors because people believe in lines and yet both neighbors believe the line is different. Reporter: Real estate mogul, barbara corcoran has seen so many of these disputes spin out of control she should be given a permanent seat on the un security counsel. It takes two to fight. If either of them had handled this intelligently the whole thing could not have happened. Reporter: Taking the long view, as in "from outer space" -- there's dan's property, and adjacent to it, barry's driveway. You can see how barry's trucks and heavy equipment wore a path across the corner of dan's property. And barry had logging equipment. His only way in and out was through this road. Reporter: Huh. Yeah. So you need a pretty good-sized entrance to make the turn. Reporter: Make the corner. My place was surveyed when i bought it. And then I had it surveyed again so I could put a fence up. So I thought, "i'm gonna put my fence up there." &#9834; barry didn't want that. With a fence up you're going to have to ride a little bit slower. You can do it just fine, but you gotta go slower. He'd knock it down, we'd go put it back. He'd knock it down and we'd go put it back. Reporter: Now dan davis was not about to be intimidated. But he's 75, with a bum knee and bad eyesight. By contrast, barry sweigle is a 245 pound paul bunyon in love with machinery. Instead of babe the blue ox rusting, carcasses of his old toys line his driveway. If you knew barry, you know he's a big boy. And, so you know I'm 300 pounds and I don't, I'd be kinda scared of him if he went sideways. Reporter: Sideways, backwards, inside or out, jason says there was something else that made barry dangerous -- he didn't know me from adam and just flat-out said he had a meth problem, you know. And he's trying to get help, and nobody will help him. Reporter: Both barry's brother and local authorities confirm barry had a history of drug use, and a penchant for paranoia. He said we were the leaders of a gang that was coming over. They were coming through our property. And uh -- -- stealing his fuel. Stealing his fuel. And his batteries. He thought that this mobile home had been surveying him in there, the government or somebody was watching him. Reporter: Even law enforcement had a growing file on the odd fellow living at 2313 east ryan drive. He was out here with his backhoe, with his excavator, digging up his yard. And, digging 20-foot deep holes in this driveway right behind us. Reporter: He was just digging holes? Just digging holes. Reporter: Barry's bizarre brew of anger, heavy machines and paranoia finally came to a full boil on an otherwise beautiful morning last may. When he turned his attention back to his neighbor dan and that fence of his! He was saying something. I couldn't understand him. He was just bouncing up and down, giving me the finger. Reporter: Hmmm. Well, the first time in my life I ever did it. I gave him the finger back. Reporter: Hmmm. Then he drove off. And then I called the sheriff. Communications, susan. Yeah, susan, my name is dan davis. And I says, "well something's gonna happen here," I says. Barry has been tearing our fence down for 10 to 12 years and i think he's gonna do it again. He just drove by here and he just harassed the hell out of me. About two-and-a-half hours later, then things basically hit the fan. He's smashing my house! Smashing your house? Reporter: When we come back, forget the fence. He's going to take out the whole neighborhood. Yeah, now he's tearing the neighbor's place down.

This transcript has been automatically generated and may not be 100% accurate.

Now Playing: Sherri Papini's Husband Recalls the Day He Discovered She Was Missing: Part 1